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GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services. This law has replaced many indirect tax laws that previously existed in India.
There are currently three types of GST
For example, if you sell something within the state, 50% of the GST will be CGST and 50% of the GST will be SGST. But when you sell something outside a state, 100% of it will be IGST which will go to the Central Government.
Now that you have a basic understanding of how GST works, we can go ahead to understand the working of GST in Tally along with its accounting and calculation.
GST calculator helps bifurcate between the different tax slabs - CGST, SGST and IGST. With the help of a GST calculator, you will know which tax slab will your transaction fall under and how much of tax will be levied on the goods/services being sold/purchased. It also saves time and reduces the chances of human error while computing the total cost of goods and services.
Couple of years into the GST era, most businesses have become conversant with the basic information they need to be on top of, as far as their goods and services are concerned. The information is nothing but – the GST rates, HSN codes, SAC codes etc. which will help them to calculate GST faster, prepare GST compliant invoices faster and therefore, conduct businesses faster.
However, there are many scenarios, wherein a businessman may be faced with an amount excluding GST, or with an amount including GST. In the fast-paced business world, one needs to know the quickest method to determine both GST exclusive and GST inclusive prices, so as to make quick sales and purchase decisions. Most countries have found useful in these circumstances a GST calculator, India too will be no different. In fact with the right knowledge of the formula, one can create a GST tax calculator in excel and keep it handy. However, the first step to being able to maintain and use a GST calculator is to be familiar with the GST rates.
GST rate schedule for goods
Under GST, there are 7 specified rates for goods, each of which have been classified under a Schedule in the GST Rates Booklet for Goods. They are as follows:
Under each Schedule, the full list of specified Goods has been provided under two columns – "Chapter/Heading/Sub-heading/Tariff item" which provides the information of the HSN Codes & "Description of Goods" which provides the unique description of the goods for the benefit of the business.
GST rate schedule for services
Under GST, there 5 specified rates for services, each of which have been classified in the GST Rates Booklet for Services. They are as follows:
GST calculation can be explained by simple illustration : If a goods or services is sold at Rs. 1,000 and the GST rate applicable is 18%, then the net price calculated will be = 1,000+ (1,000X(18/100)) = 1,000+180 = Rs. 1,180
Know how to calculate GST and use the right GST tax calculator here.
Due to the simplification of the indirect taxation regime, the calculation of the applicable taxes has become much simpler. The GST rates applicable on the various goods or services can now be calculated, based on the nature of the transaction – inter-state or intra-state.
Intra-state GST tax calculator
In case of Intra-State transactions, GST can be calculated as follows:
In other words, CGST + SGST / UTGST = Applicable GST Rate
Inter-State GST tax calculator
In case of Inter-State transactions, GST can be calculated as follows:
Note: Wherever applicable, GST Compensation Cess should be added to the applicable GST rate for the correct tax calculations. Even a GST credit calculator, will be based on the same principles.
Thus, a simple formula arises:
However, in those cases, where a price inclusive is mentioned, a reverse GST calculator will need to be applied. Like above, this also will be based on a simple formula:
A simple example of how GST is calculated typically by business owners
|Price to be charged on the Invoice||2,24,000|
GST calculation by manufacturers:
|Particulars||Rate(%)||Amount Pre-GST||Amount under GST|
|Cost of the product||–||2,00,000||2,00,000|
|Final Invoice to the wholesaler||–||2,78,438||2,46,400|
GST calculator helps you find out either net or gross price of your product based on a percentage-based GST (Goods and Services Tax) rate. It's straightforward to use - provide values that you know (for example, net price and GST rate) to receive other values (in this case, gross price and tax amount)
GST inclusive amount refers to the total value of the product after including the GST amount in the original value of the product. The tax is not charged separately from the customer
GST Exclusive amount refers to the value of the product by subtracting the GST amount from the GST Inclusive value of the product.
Here are some of the key benefits of using a GST calculator:
Aggregate turnover does not include value of inward supplies on which tax is payable on reverse charge basis. What if the dealer migrated with wrong PAN as the status of firm was changed from proprietorship to partnership? New registration would be required as partnership firm would have new PAN.
Read More on GST
GST Software, GST Software for CAs, GST Software for Traders, GST Invoicing Software, GST on Freight, GST on Ecommerce, GST Impact on TCS, GST Impact on TDS, GST Exempted Goods & Services, Reverse Charge Mechanism in GST, GST Declaration
GST Rates & Charges
Types of GST